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<---------------------------------Underwriting Year 2001--------------------------------->

Can cover losses occurring during this period

Explanation:

Underwriting Year 2001 encompasses any treaties written by the reinsurer in 2001. If these treaties cover "Risks Attaching“ or “Policies Incepting” during the treaty period. Underwriting Year 2001 can theoretically span two years and three accident years (assuming 12-month underlying policies and 12-month treaties, otherwise the exposure period could be even longer).

As of December 31, 2001, Underwriting Year 2001 is “incomplete”. Using standard loss development techniques with factors derived from the past underwriting years will overstate the development of Underwriting Year 2001. Historical development after 12 months includes losses on exposures earned after 12 months of an underwriting year. Provision for these losses should not be included in reserves at the December 31, 2001 accounting date.

Primary losses develop faster than reinsurance losses if only due to the time it takes for information to reach the reinsurer

Proportional business (“broker”): Accounts are often not due to the reinsurer until 30-90 days after the close of the quarter

It is then possible that losses that the ceding company books in calendar year “X” will be realized and booked by the reinsurer in calendar year “X+1”. The same loss will be in two different triangle “cells”